Patience, financial discipline vital

WHEN purchasing a property, many buyers focus on whether they can afford the purchase price but fail to consider whether they can cover the various upfront costs involved in the purchase, such as transfer duties and bond registration fees.

There are several financing options available to buyers who do not have those funds readily available, but Adrian Goslett, regional director and chief executive of Re/Max of Southern Africa, says the best option is to wait until you have enough saved to cover these costs without taking out any additional forms of credit.

“While there are several financing options available, including personal loans or 105% home loans, any form of credit to cover these costs will just amount to higher monthly debt repayments and money lost due to interest charges.

“This becomes especially worrying under the current economic circumstances where inflation is shrinking households’ disposable income levels and interest rates are climbing, making debt more expensive.”

Instead of taking out further loans, those who already own a home could leverage the sale of the home to afford the costs of buying a new home. If the money from the sale of the home has already been received before the homeowner has put in an offer on a new home, buyers can simply use that cash to cover the bond and transfer costs on the new property.

Those who still need to sell the property to pay for the new home could opt for bridging finance before their home is sold, says Carl Coetzee, chief executive of BetterBond.

“This is a short-term finance option that can be quickly and easily arranged. You are advanced a portion of the money owing to you from the sale of your property, which bridges the gap between your current cash shortfall and your future payout on registration of transfer.

“With bridging finance, the money is advanced almost immediately and you pay it back when the transfer goes through. This affords you the financial freedom to pay for things such as conveyancing and transfer fees; municipal rates; taxes and levies or even renovation costs.”

While there are many options available to buyers who need to cover the upfront costs of purchasing a home, Goslett stresses that patience and financial discipline are still your best bet to enjoy greater financial freedom.

RATHER save up to pay the upfront costs of buying a home than take out additional credit. PICTURE: STEVE BUISSINNE/PIXABAY